Farmers in India face income decline amid rising costs: Madhura Swaminathan

Agricultural income in India continues to decline, leaving rural households barely earning adequate income and farmers facing precarious returns, said Madhura Swaminathan, professor at the Indian Statistical Institute, Bangalore.

Delivering the Durgabai Deshmukh Memorial Lecture on “The Agrarian Economy: Perceptions Versus Reality”, Swaminathan said despite India being an agrarian economy where 69 per cent of the population lives in rural areas and 90 per cent of rural households participate in agriculture in some way, its share of income and its contribution to the overall economy are both on the decline.

Swaminathan highlighted that according to the Situation Assessment Survey of Farmers conducted for the first time since independence in 2012-13, the average monthly income of farmers increased from ₹6,000 to ₹10,000 over a six-year period, representing a 56 per cent nominal increase, but only an 18 per cent increase in real terms. For marginal farmers, those with less than one hectare of land, real incomes actually declined between 2012-13 and 2018-19.

 

“Income from crop production and allied sectors declined. Even by official statistics, average income is low and declined in real terms, and it is becoming a smaller and smaller share,” she added.

Swaminathan further emphasised the significant “profit squeeze” facing the agricultural sector, where the ratio of agricultural output value to production costs has been steadily decreasing, resulting in minimal returns for most farmers.

Citing a survey by the Foundation for Agrarian Studies, which studied 21 villages across 12 states, Swaminathan said that whether in a village in Rajasthan or Tripura, a significant portion of farmers are experiencing negative incomes due to various factors. This issue is particularly severe in rain-fed villages compared to irrigated ones. Swaminathan pointed out that small farmers, who lack the resources to withstand adverse conditions, face severe financial difficulties in disaster years, with a substantial section of farmers struggling with losses. She also pointed out that Dalit households incur maximum losses.

Swaminathan said Indian agriculture is not heavily subsidised compared to international standards. In 2017, the EU spent $74 billion on agricultural subsidies and the US spent $118 billion for just two million farmers. In contrast, India’s agricultural subsidies amounted to $57 billion in 2018, serving a significantly larger number of farmers. Organisation for Economic Co-operation and Development (OECD) reports also indicate that net support to producers in India has been negative over the past two decades, suggesting that agricultural policies benefit consumers more than farmers, she added.

Highlighting the under-recognition of women’s contributions to agriculture, Swaminathan said despite high levels of participation, women’s labour in agriculture and allied sectors, such as livestock rearing, is often undercounted. According to her, a typical scheduled caste household shows that both men and women are equally willing to be involved in the labour market, yet women’s work is not adequately captured in official labour force surveys.

Swaminathan pointed out that there is a global gender wage gap in both rural and urban areas, and increasing rural women’s income should not be viewed merely as a subsidy but as a provision of a basic, adequate income.

The professor advocated for raising subsidies to support a diversified food basket, necessary for achieving a balanced diet for the Indian population.

“The Green Revolution brought self-sufficiency in wheat and rice, but the current focus needs to shift towards diversifying crop production and employing new scientific methods. These include direct-seeded rice techniques that use less water and gene-edited crops that are more climate-friendly,” she added.

Swaminathan called for the minimum support price to be made a statutory floor price and for increased government expenditure to address the agricultural crisis and advocated for reforms that would better support farmers and recognise the full scope of women’s work in agriculture.